With Annotation- Marilao Water vs IAC.pdf

7/1/2015 SUPREMECOURTREPORTSANNOTATEDVOLUME201

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VOL. 201, SEPTEMBER 9, 1991 437Marilao Water Consumers Association, Inc. vs. IAC

G.R. No. 72807. September 9, 1991.*

MARILAO WATER CONSUMERS ASSOCIATION, INC.,petitioners, vs. INTERMEDIATE APPELLATE COURT,MUNICIPALITY OF MARILAO, BULACAN,SANGGUNIANG BAYAN, MARILAO, BULACAN, andMARILAO WATER DISTRICT, respondents.

Remedial Law Civil Procedure Appeal The firmly settledprinciple is that the remedy against a final order is the ordinaryremedy of an appeal either solely on questions of law or questionsof fact and law.Turning first to the adjective issue, it is quiteevident that the Order of the Trial Court of June 8,1984,dismissing the action of the Consumers Association, is really afinal order it finally disposed of the proceeding and left nothingmore to be done by the Court on the merits. Now, the firmlysettled principle is that the remedy against such a final order isthe ordinary remedy of an appeal, either solely on questions oflawin which case the appeal may be taken only to the SupremeCourtor questions of fact and lawin which event the appealshould be brought to the Court of Appeals. The extraordinaryremedy of a special civil action of certiorari or prohibition is notthe appropriate recourse because precisely, one of the conditionsfor availing of it is that there should be no appeal, nor any.plain,speedy and adequate remedy in the ordinary course of law. Aresort to the latter instead of the former would ordinarily be fatal,unless it should appear in a given case that appeal wouldotherwise be an inefficacious or inadequate remedy.

Corporation Law Securities and Exchange CommissionJurisdiction Juridical entities known as water districts created byPD 198 although considered as quasipublic corporations areentirely distinct from corporations organized under theCorporation Code, PD 902A as amended The SEC which ischarged with enforcement of the Corporation Code as regards



corporations, partnerships and associations formed or operatingunder its provisions has no power of supervision or control over theactivities of water districts.The juridical entities known aswater districts created by PD 198, although considered as quasipublic corporations and authorized to exercise the powers, rightsand privileges given to private corporations under existing laws,are entirely distinct from corporations organized under theCorporation Code, PD

________________

* FIRST DIVISION.

438

438 SUPREME COURT REPORTS ANNOTATED

Marilao Water Consumers Association, Inc. vs. IAC

902A, as amended. The Corporation Code has nothing whateverto do with their formation and organization, all the terms andconditions for their organization and operation being particularlyspelled out in PD 198. The resolutions creating them, theircharters, in other words, are filed not with the Securities andExchange Commission but with the LWUA. It is these resolutionsqua charters, and not articles of incorporation drawn up underthe Corporation Code, which set forth the name of the waterdistricts, the number of their directors, the manner of theirselection and replacement, their powers, etc. The SEC which ischarged with enforcement of the Corporation Code as regardscorporations, partnerships and associations formed or operatingunder its provisions, has no power of supervision or control overthe activities of water districts

Same Same Same Same The function of supervision orcontrol over water districts is entrusted to the Local Water UtilitiesAdministration.The function of supervision or control overwater districts is entrusted to the Local Water UtilitiesAdministration. Consequently, as regards the activities of waterdistricts just mentioned, the SEC obviously can have no claim toany expertise.

Same Same Same Same Under Section 45 of PD 198, it isthe LWUA which is the administrative body involved in the



voluntary dissolution of a water district it is with it that theresolution of dissolution is filed not with the Securities andExchange Commission.Under this provision, it is the LWUAwhich is the administrative body involved in the voluntarydissolution of a water district it is with it that the resolution ofdissolution is filed, not the Securities and Exchange Commission.And this provision is evidently quite distinct and different fromthose on dissolution of corporations formed or organized underthe provisions of x x (the Corporation) Code set out in Sections117 to 121, inclusive, of said Code, under which dissolution maybe voluntary (by vote of the stockholders or members), generallyeffected by the filing of the corresponding resolution with theSecurities and Exchange Commission, or involuntary, commencedby the filing of a verified complaint also with the SEC.

Same Same Same There can be no such thing in a waterdistrict as intracorporate or partnership relations, between andamong stockholders, members or associates between any or all ofthem and the corporation, partnership or association of which theyare stockholders, members or associates respectively within thecontemplation of Section 5 of the Corporation Code so as to bringcontroversies involving them within the competence andcognizance of the SEC.All these argue

439

VOL. 201, SEPTEMBER 9, 1991 439

Marilao Water Consumers Association, Inc. vs. IAC

against conceding jurisdiction in the Securities and ExchangeCommission over proceedings for the dissolution of waterdistricts. For although described as quasipublic corporations, andgranted the same powers as private corporations, water districtsare not really corporations. They have no incorporators,stockholders or members, who have the right to vote for directors,or amend the articles of incorporation or bylaws, or passresolutions, or otherwise perform such other acts as areauthorized to stockholders or members of corporations by theCorporation Code. In a word, there can be no such thing as arelation of corporationandstockholders or members in a waterdistrict for the simple reason that in the latter there are nostockholders or members. Between the water district and thosewho are recipients of its water services there exists not the



relationship of corporationandstockholder, but that of a serviceagency and users or customers. There can therefore be no suchthing in a water district as intracorporate or partnershiprelations, between and among stockholders, members orassociates (or) between any or all of them and the corporation,partnership or association of which they are stockholders,members or associates, respectively, within the contemplation ofSection 5 of the Corporation Code so as to bring controversiesinvolving them within the competence and cognizance of the SEC.

Same Same Same The Consumer Associations action is inthe nature of mandamus falling within the general jurisdiction ofthe Regional Trial Courts.The Consumer Associations actiontherefore is, in fine, in the nature of a mandamus suit, seeking tocompel the board d of directors of the Marilao Water District, andits alleged coconspirators, the Sangguniang Bayan and the Mayorof Marilao to go through the process above described for thedissolution of the water district. In this sense, and indeed, takingaccount of the nature of the proceedings for dissolution justdescribed, it seems plain that the case does not fall within thelimited jurisdiction of the SEC, but within the general jurisdictionof Regional Trial Courts.

PETITION for certiorari to review the decision of the thenIntermediate Appellate Court.

The facts are stated in the opinion of the Court.Magtanggol C. Gunigundo for petitioner.Prospero A. Crescini for Marilao Water District.

NARVASA, J.:

Involved in this appeal is the determination of whichtribunal

440

440 SUPREME COURT REPORTS ANNOTATEDMarilao Water Consumers Association, Inc. vs. IAC

has jurisdiction over the dissolution of a water districtorganized and operating as a quasipublic corporationunder the provisions of Presidential Decree No. 198, asamended

1 the Regional Trial Court, or the Securities &

Exchange Commission.PD 198 authorizes the formation, lays down the powers



a)

b)

and functions, and governs the operation of water districtsthroughout the country it is the source of authorizationand power to form and maintain a (water) district/' Onceformed, it says, a district is subject to its provisions and isnot under the jurisdiction of any political subdivision.

2

Under PD 198, water districts may be created by thedifferent local legislative bodies by the passage of aresolution to this effect subject to the terms of the decree.The primary function of these water districts is to sellwater to residents within their territory, under suchschedules of rates and charges as may be determined bytheir boards.

3 They shall manage, administer, operate and

maintain all watersheds within their territorialboundaries, safeguard and protect the use of the waterstherein, supervise and control structures within theirservice areas, and prohibit any person from selling orotherwise disposing of water for public purposes withintheir service areas where district facilities are available toprovide such service.

4

The decree specifies the terms under which waterdistricts may be formed and operate. It prescribes,particularly

the name by which a water district shall be known,which shall be contained in the enabling resolution,and shall include the name of the city,municipality, or province, or region thereof, servedby said system, followed by the words, WaterDistrict

5

the number and qualifications of the members ofthe boards of directors, with the date of expirationof term of office

________________

1 Otherwise known as the Provincial Water Utilities Act of 1973"[effective May 25, 1973] as amended by PD No. 768 and PD No. 1479[effective June 11, 1978],

2 Section 6, PD 198.3 SEC. 38, PD 198, as amended by PD 768.4 SEC. 31, PD 198, as amended by PD 768 and PD 1479.5 Sec. 6(a).

441




for each6 the manner of their selection and initial

appointment by the head of the local politicalsubdivision

7 their terms of office which shall be in

staggered periods of two, four and six years)8 the

manner of filling up vacancies in the board9 the

compensation and liabilities of members of theboard.

10 The resolution shall contain a statement

that the district may only be dissolved on thegrounds and under the conditions set forth inSection 44" of the law, but nothing in the resolutionof formation, the decree adds, shall state or inferthat the local legislative body has the power todissolve, alter or affect the district beyond thatspecifically provided for in this Act."

11

The juridical entities thus created and organized under PD198 are considered quasipublic corporations, performingpublic services and supplying public wants. They areauthorized not only to exercise all the powers which areexpressly granted by said decree, and those which arenecessarily implied from or incidental to said powers, butalso the power of eminent domain, the exercise x x (ofwhich) shall however be subject to review by theAdministration (LWUA). In addition to the powersgranted in, and subject to such restrictions imposed under,the Act, they may also exercise the powers, rights andprivileges given to private corporations under existinglaws.

12

The decree also established a government corporationattached to the Office of the President, known as the LocalWater Utilities Administration (LWUA),

13 to function

primarily as a specialized lending institution for thepromotion, development and financing of local waterutilities. It has the following

________________

6 Secs. 6 and 8.7 Secs. 3(b), 9 and 10.8 Sec. 11,9 Sec. 12.10 Secs. 13, 14.



"(1)

(2)

(3)(4)

11 Sec. 6, PD 198.12 SEC. 6, PD 198, as amended by PD 1479 SEE Tanjay Water District

v. Gabaton, et al., 172 SCRA 253, citing, also, Sec. 35, Art. VIII and Sec.37, Art. IX of PD 807 (The Civil Service Act). SEE, too, Baguio WaterDistrict vs. Trajano, et al., 127 SCRA 730 Hagonoy Water District vs.NLRC, 165 SCRA 272.

13 SEC. 49, PD 198, as amended by PD 768.

442


specific powers and duties14

prescribe minimum standards and regulations inorder to assure acceptable standards of constructionmaterials and supplies, maintenance, operation,personnel training, accounting and fiscal practicesfor local water utilitiesfurnish technical assistance and personnel trainingprograms for local water utilitiesmonitor and evaluate local water standards andeffect systems integration, joint investment andoperations, district annexation and deannexationwhenever economically warranted.

It was pursuant to the foregoing rules and norms that theMarilao Water District Was formed by Resolution of theSangguniang Bayan of the Municipality of Marilao datedSeptember 18,1982, which resolution was thereafterforwarded to the LWUA and duly filed by it on October47, 1982 after ascertaining that it conformed to therequirements of the law.

15

The claim was thereafter made that the creation of theMarilao Water District in the manner aforestated wasdefective and illegal. The claim was made by a nonstock,nonprofit corporation known as the Marilao WaterConsumers Association, Inc., in a petition dated December12, 1983 filed with the Regional Trial Court at Malolos,Bulacan. Impleaded as respondents were the MarilaoWater District, as well as the Municipality of Marilao,Bulacan its Sangguniang Bayan and Mayor Nicanor V.Guillermo. The petition prayed for the dissolution of the



1)

2)

3)

4)

water district on the basis chiefly of the followingallegations, to wit:

there had been no real, but only a farcical publichearing prior to the creation of the Water Districtnot only was the waterworks system turned over tothe

________________

14 SEC. 50, PD 198, as amended by PD 768.15 SEC. 7 (as amd by PD 768) provides that the district is deemed duly

formed and existing upon the date of such filing and that thereupon, thelocal government or governments concerned shall lose ownership,supervision and control or any right whatsoever over the district except as(otherwise) provided xx.

443


Water District without compensation but a subsidywas illegally authorized for itthe Water District was being run with negligence,apathy, indifference and mismanagement, and wasnot providing adequate and efficient service to thecommunity, but this notwithstanding, theconsumers were being billed in full and threatenedwith disconnection for failure to pay bills on timein fact, one of the consumers who complained hadhis water service cut offthe consumers were consequently forced toorganize themselves into a corporation last October3, 1983 x x for the purpose of demanding adequateand sufficient supply of water and efficientmanagement of the waterworks in Marilao,Bulacan."

16

Acting on the complaint, particularly on the application fortemporary restraining order and preliminary injunction setout therein, the Trial Court issued an Order on December22, 1983 setting the application for preliminary hearing,requiring the respondents to answer the petition and



restraining them until further orders from collecting anywater bill, disconnecting any water service, transferringany property of the waterworks, or disbursing any amountin favor of any person. The order was modified on January6,1984 to allow the respondents to pay the districtsoutstanding obligations to Meralco, by way of exception tothe restraining order.

On January 13, 1984 the Marilao Water District filed itsAnswer with Compulsory Counterclaim, denying thematerial allegations of the petition and asserting asaffirmative defenses (a) the Courts lack of jurisdiction ofthe subject matter, and (b) the failure of the petition tostate a cause of action. The answer alleged that the matterof the water districts dissolution fell under the original andexclusive jurisdiction of the Securities & ExchangeCommission (SEC) and the matter of the propriety ofwater rates, within the primary administrative jurisdictionof the LWUA and the quasijudicial jurisdiction of theNational Water Resources Council. On the same date,Marilao Water District filed a motion for admission of itsthirdparty complaint

________________

16 Rollo, pp. 3441.

444


against the officers and directors of the petitionercorporation, it being claimed that they had instigated thefiling of the petition simply because one of them was apolitical adversary of the respondent Mayor.

The other respondents also filed their answer throughthe Provincial Fiscal of Bulacan, setting up the sameaffirmative defense of lack of jurisdiction on the part of theTrial Court and failure of the petition to state a cause ofaction since it admitted that it was by resolution of theMarilao Sangguniang Bayan that the Marilao WaterDistrict was constituted.

The petitionerthe Marilao Consumers Associationfiled a reply, and an answer to the counterclaim, onJanuary 26,1984. It averred that since the Marilao Water



District had not been organized under the CorporationCode, the SEC had no jurisdiction over a proceeding for itsdissolution and that under Section 45 of PD 198, theproceeding to determine if the dissolution of the. waterdistrict is for the best interest of the people, is within thecompetence of a regular court of justice, and neither theLWUA nor the National Water Resources Council iscompetent to take cognizance of the matter of dissolution ofthe water district and recovery of its waterworks system, orthe exorbitant rates imposed by it. The ConsumersAssociation also opposed admission of the thirdpartycomplaint on the ground that its individual officers are notpersonally amenable to suit for acts of the corporation,

17

which has a personality distinct from theirs.The Trial Court found for the respondents. It dismissed

the Consumers Associations suit by Order handed down onJune 8, 1984 which pertinently reads as follows:

After a consideration of the arguments raised by the hereinparties, the Court is more inclined to take the position of therespondents that the Securities and Exchange Commission hasthe exclusive and original jurisdiction over this case.

WHEREFORE, the instant petition, the thirdparty complaint,and the compulsory counterclaim filed herein are herebyDISMISSED, for lack of jurisdiction.

________________

17 SEC. 14, PD 198, provides that No director may be held to bepersonally liable for any action of the distinct.

445


Its motion for reconsideration having been denied, byOrder dated September 20, 1984, the ConsumersAssociation filed with this Court a petition for review oncertiorari, which was docketed as G.R. No. 68742. The casewas however referred to the Intermediate Appellate Courtby this Courts Second Division, in a Resolution datedNovember 19, 1984, where it was docketed as ACG.R. SP.No. 04852.

But there in the Intermediate Appellate Court, the



1)

2)

a)b)

Consumers Associations cause also met with failure. TheAppellate Court, in its Decision promulgated on September10, 1985, ruled that its cause could not prosper because

it had availed of the wrong remedy, i.e., the specialcivil action of certiorari the Order of June 8, 1984being a final orderin the sense that it leftnothing else to be done in the case"the properremedy was appeal under Rule 41 of the Rules ofCourt and not a certiorari suit under Rule 65 andeven if the certiorari action be treated as an appeal,it was unerringly clear that the controversy x xfalls within the competence of the SEC," in virtue ofP.D. 902A

18 which provides that said agency shall

have original and exclusive jurisdiction to hear anddecide cases involving:

xxxControversies arising out of intracorporate orpartnership relations, between and amongstockholders, members or associates between anyor all of them and the corporation, partnership orassociation of which they are stockholders,members or associates, respectively and betweensuch corporation, partnership or association andthe state insofar as it concerns their individualfranchise or right to exist as such entity x x.

The Appellate Court subsequently denied the petitionersmotion for reconsideration, by Resolution dated November4, 1985. Hence, the petition for review on certiorari at bar,in which reversal of the Appellate Tribunals decision issought, the petitioner insisting that the remedy resorted toby it was correct but misunderstood by the I.A.C., and thatthe law does indeed vest exclusive jurisdiction over thesubject matter of the case in

________________

18 Sec. 5.

446




the Regional Trial Court, not the Securities and ExchangeCommission.

Turning first to the adjective issue, it is quite evidentthat the Order of the Trial Court of June 8,1984,dismissing the action of the Consumers Association, isreally a final order it finally disposed of the proceedingand left nothing more to be done by the Court on themerits. Now, the firmly settled principle is that the remedyagainst such a final order is the ordinary remedy of anappeal, either solely on questions of lawin which case theappeal may be taken only to the Supreme Courtorquestions of fact and lawin which event the appealshould be brought to the Court of Appeals. Theextraordinary remedy of a special civil action of certiorarior prohibition is not the appropriate recourse becauseprecisely, one of the conditions for availing of it is thatthere should be no appeal, nor any plain, speedy andadequate remedy in the ordinary course of law."

19 A resort

to the latter instead of the former would ordinarily be fatal,unless it should appear in a given case that appeal wouldotherwise be an inefficacious or inadequate remedy.

20

In holding that Marilao Water District had resorted tothe wrong remedy against the Trial Courts orderdismissing its suit, i.e., the special civil action of certiorari,instead of an appeal, the Intermediate Appellate Courtquite overlooked the fact, not seriously disputed by theMarilao Water District and its corespondents, that theformer had in fact availed of the remedy of appeal bycertiorari under Rule 45 of the Rules of Court, as requiredby paragraph 25 of the Interim Rules & Guidelines of thisCourt, implementing Batas Pambansa Bilang 129 thatbefore doing so, it had first asked for and been granted anextension of thirty (30) days within which to file a petitionfor review on certiorari but that subsequently, byResolution of this Courts Second Division dated November19, 1984, the case was referred to the IntermediateAppellate Court, evidently because it was felt that certainfactual issues had yet to be determined. In any case, allthings considered, the

________________

19 Secs. 1, 2, and 3, Rule 65, Rules of Court.20 SEE, e.g., PNB vs. Puno, 170 SCRA 229 Angeles vs. IAC, 178 SCRA



125.

447


Court is not prepared to have the case at bar finallydetermined on this procedural issue.

The juridical entities known as water districts createdby PD 198, although considered as quasipubliccorporations and authorized to exercise the powers, rightsand privileges given to private corporations under existinglaws,

21 are entirely distinct from corporations organized

under the Corporation Code, PD 902A, as amended. TheCorporation Code has nothing whatever to do with theirformation and organization, all the terms and conditionsfor their organization and operation being particularlyspelled out in PD 198. The resolutions creating them, theircharters, in other words, are filed not with the Securitiesand Exchange Commission but with the LWUA. It is theseresolutions qua charters, and not articles of incorporationdrawn up under the Corporation Code, which set forth thename of the water districts, the number of their directors,the manner of their selection and replacement, theirpowers, etc. The SEC which is charged with enforcement ofthe Corporation Code as regards corporations, partnershipsand associations formed or operating under its provisions,has no power of supervision or control over the activities ofwater districts. More particularly, the SEC has no power ofoversight over such activities of water districts as sellingwater, fixing the rates and charges therefor,

22 or the

management, administration, operation and maintenanceof watersheds within their territorial boundaries, or thesafeguarding and protection of the use of the waterstherein, or the supervision and control of structures withinthe service areas of the district, and the prohibition of anyperson from selling or otherwise disposing of water forpublic purposes within their service areas where districtfacilities are available to provide such service.

23 That

function of supervision or control over water districts isentrusted to the Local Water Utilities Administration.

24

Consequently, as regards the activities of water districtsjust mentioned, the SEC obviously can have no



________________

21 SEE footnote 13, supra.22 SEC. 38, PD 198, as amended by PD 768.23 SEC. 31, PD 198, as amended by PD 768 and PD 1479.24 SEC. 62, PD 198, as amended by PD 768.

448


claim to any expertise.The Provincial Water Utilities Act of 1973" has a

specific provision governing dissolution of water districtscreated thereunder This is Section 45 of PD 198

25 reading

as follows:

SEC. 45. Dissolution.A district may be dissolved by resolutionof its board of directors filed in the manner of filing the resolutionforming the district: Provided, however, That prior to the adoptionof any such resolution: (1) another public entity has acquired theassets of the district and has assumed all obligations andliabilities attached thereto (2) all bondholders and other creditorshave been notified and they consent to said transfer anddissolution and (3) a court of competent jurisdiction has foundthat said transfer and dissolution are in the best interest of thepublic.

Under this provision, it is the LWUA which is theadministrative body involved in the voluntary dissolutionof a water district it is with it that the resolution ofdissolution is filed, not the Securities and ExchangeCommission. And this provision is evidently quite distinctand different from those on dissolution of corporationsformed or organized under the provisions of xx (theCorporation) Code set out in Sections 117 to 121, inclusive,of said Code, under which dissolution may be voluntary (byvote of the stockholders or members), generally effected bythe filing of the corresponding resolution with theSecurities and Exchange Commission, or involuntary,commenced by the filing of a verified complaint also withthe SEC.

All these argue against conceding jurisdiction in theSecurities and Exchange Commission over proceedings forthe dissolution of water districts. For although described as



quasipublic corporations, and granted the same powers asprivate corporations, water districts are not reallycorporations. They have no incorporators, stockholders ormembers, who have the right to vote for directors, oramend the articles of incorporation or bylaws, or passresolutions, or otherwise perform such other acts as areauthorized to stockholders or members of corporations bythe Corporation Code. In a word, there can be no suchthing as a relation of corporationandstockholders ormembers in a

________________

25 As amended by PD 768, eff. Aug. 15, 1975.

449


water district for the simple reason that in the latter thereare no stockholders or members. Between the water districtand those who are recipients of its water services thereexists not the relationship of corporationandstockholder,but that of a service agency and users or customers. Therecan therefore be no such thing in a water district as intracorporate or partnership relations, between and amongstockholders, members or associates (or) between any or allof them and the corporation, partnership or association ofwhich they are stockholders, members or associates,respectively, within the contemplation of Section 5 of theCorporation Code so as to bring controversies involvingthem within the competence and cognizance of the SEC.

There can be even less debate about the fact that theSEC has no jurisdiction over the corespondents of theMarilao Water Districtthe Municipality of Marilao, itsSangguniang Bayan and its Mayorwho are accused of aconspiracy with the water district in respect of theanomalies described in the Consumer Associationspetition.

26

The controversy, therefore, between the ConsumersAssociation, on the one hand, and Marilao District and itscorespondents, on the other, is not within the jurisdictionof the SEC, In their answer with counterclaim in theproceedings a quo, the respondents advocated the theory



that the case falls within the jurisdiction of the LWUAand/or the National Water Resources Council.

The LWUA does not appear to have any adjudicatoryfunctions. It is, as already pointed out, primarily aspecialized lending institution for the promotion,development and financing of local water utilities,"

27 with

power to prescribe minimum standards and regulationsregarding maintenance, operation, personnel training,accounting and fiscal practices for Iocal water utilities, tofurnish technical assistance and personnel trainingprograms therefor monitor and evaluate local waterstandards and effect systems integration, joint investmentand operations, district annexation and deannexationwhenever

________________

26 Rollo, pp. 3441.27 SEE footnote 13, supra.

450


economically warranted.28 The LWUA has quasijudicial

power only as regards rates or charges fixed by waterdistricts, which it may review to establish compliance withthe provisions of PD 198, without prejudice to appeal beingtaken therefrom by a water concessionaire to the NationalWater Resources Council whose decision thereon shall beappealable to the Office of the President.

29 The rates or

charges established by respondent Marilao Water Districtdo not appear to be at issue in the controversy at bar.

The National Water Resources Council, on the otherhand, is conferred original jurisdiction over all disputesrelating to appropriation, utilization, exploitation,development, control, conservation and protection of waterswithin the meaning and context of the provisions of x x(the Code by which said Council was created, PresidentialDecree No. 1067, otherwise known as the Water Code ofthe Philippines)

30 and its decision on water rights

controversies may be appealed to the Court of FirstInstance of the province where the subject matter of thecontroversy is situated.

31 It also has authority to review



1)

a)

1)

2)

questions of annexations and deannexations (addition to orexclusion from the district of territory). Again it does notappear that the case at bar is a water rights controversy orone involving annexation or deannexation.

What essentially is sought by the ConsumersAssociation is the dissolution of the Marilao Water District,on the ground that its formation was illegal and invalidthe waterworks system had been turned over to it withoutcompensation and a subsidy illegally authorized for it andthe Water District was being run with negligence, apathy,indifference and mismanagement, and was not providingadequate and efficient service to the community.

32 Now, as

already above stated, the dissolution of a water

________________

28 SEC. 50, PD 198, as amended by PD 768 (SEE footnote 14, supra).29 SEC. 68, PD 198, as amended by PD 768.30 Effective Dec. 31, 1976 SEE Sec. 88 of said PD 1067.31 Sec. 89, PD 1067.32 SEE footnote 15, supra.

451


district is governed by Section 45 of PD 198, as amended,stating that it may be dissolved by resolution of its boardof directors filed in the manner of filing the resolutionforming the district, subject to enumerated prerequisites.

33 The procedure for dissolution thus consists of

the following steps:

the initiation by the board of directors of the waterdistrict motu proprio or at the relation of aninterested party, of proceedings for the dissolutionof the water district, including:

the ascertainment by said board that

another public entity has acquired the assets of thedistrict and has assumed all obligations andliabilities attached thereto andall bondholders and other creditors have been



b)

2)

3)

notified and consent to said transfer anddissolution

the commencement by the water district in a courtof competent jurisdiction of a proceeding to obtain adeclaration that said transfer and dissolution arein the best interest of the public

after compliance with the foregoing requisites, theadoption by the board of directors of the waterdistrict of a resolution dissolving the water districtand its submission to the Sangguniang Bayanconcerned for approvalsubmission of the resolution of the SangguniangBayan dissolving the water district to the head ofthe local government concerned for approval, andultimately to the LWUA, for final approval andfiling.

The Consumer Associations action therefore is, in fine, inthe nature of a mandamus suit, seeking to compel theboard of directors of the Marilao Water District, and itsalleged coconspirators, the Sangguniang Bayan and theMayor of Marilao to go through the process above describedfor the dissolution of the water district. In this sense, andindeed, taking account of the nature of the proceedings fordissolution just described, it seems plain that the case doesnot fall within the limited jurisdiction of the SEC, butwithin the general jurisdiction of Regional Trial Courts.

________________

33 SEE footnote 23, and related text, supra.

452


WHEREFORE, the Decision of the Intermediate AppellateCourt of September 10, 1985affirming that of theRegional Trial Court of June 8, 1984is REVERSED andSET ASIDE, and the case is remanded to the RegionalTrial Court for further proceedings and adjudication in



accordance with law. No costs.SO ORDERED.

Cruz, Gancayco,** GrioAquino

*** and Medialdea,

JJ., concur.

Petition reversed and set aside. Case remanded to RTCfor further proceedings.

Note.The jurisdiction to hear and decide disputesrelating to appropriation, utilization and control of water inthe first instance pertains to the Water Resources Council,while the Court of First Instance (now Regional TrialCourt) has only appellate jurisdiction over the case.(Tanjay Water District vs. Gabatan, 172 SCRA 253.)

oOo

________________

** Retired, as of August 20,1991.*** GrioAquino, J., takes no part, having concurred, together with

Mendoza, J., with the Resolution of Nov. 4, 1985 written by Purisima, J.for the Second Special Cases Division of the Intermediate Appellate Courtin ACG.R. SP No. 04852 DENYING the motion for reconsideration of thepetitioner (Marilao Water Consumers Association, Inc.).

453

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